Scala issues US$380mn in green bonds for datacenter investments

DigitalBridge’s Latin American hyperscale company Scala Data Centers closed the issuance of a record 2bn reais (US$378mn) in green debentures to finance its expansion plan.

The proceeds will be used specifically to build datacenters with technologies that optimize energy efficiency, with the objective of achieving an average annual power usage effectiveness (PUE) of less than 1.40.

This will come from the development, acquisition, maintenance and operation of facilities with renewable energy, in addition to the verification of green building certifications.

“This issuance is the largest ever made in Brazil and the first of its kind in the datacenter sector in the country. Scala's PUE is already the lowest on the market. The average PUE in Latin America is 1.74. I have sites in São Paulo that have already reached a PUE of 1.19,” Scala CEO Marcos Peigo told BNamericas.

The PUE rate is calculated by dividing the total facility power (the power entering the site) by the IT equipment power (the power effectively used to run the machines). PUE rates above 2 usually mean that a datacenter is not power efficient.

According to the executive, green debentures are different from sustainability-linked bonds (SLBs), such as the one announced this week by Elea Digital, because the latter would be linked to future targets, while debentures would work more as a seal for already implemented sustainable practices.

“I'd say SLBs are a first step on that trajectory. It would make sense for us to do that two years ago. Today, however, we already have 100% renewable and certified energy in our operations, our PUE is the lowest in the market, we neutralize our carbon emissions,” said Peigo.

Since its creation in April 2020, Scala has invested 6.2bn reais in its operations. Of this total, 4bn reais came from its own cash and the remainder was financed with banks.

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The company currently has 108MW of capacity contracted by customers in its datacenters of total potential of 1GW for lease, according to Peigo. In the last four months alone, the company closed contracts equivalent to 60MW of capacity.

The target for 2023 is to reach at least 155MW of contracted capacity, says the CEO.

Last month, the company signed a long-term deal with Italy’s Enel for the power supply of existing and future regional datacenter projects.

That agreement secured at least 600MW of total power for Scala’s Tamboré hyperscale campus, in São Paulo state, and almost 1GW for other Brazilian and Latin American operations, including datacenter projects being developed in Fortaleza, Santiago, Lima and Bogotá.

FINANCIAL DETAILS

Scala's green debentures were supported by a Second-Party Opinion (SPO) from Sustainalytics, one of the leading issuers of reports of this kind, with more than 30 years operating in environmental, social and governance (ESG) ratings and analytical data, and expertise in the datacenter segment, according to the executive.

Banco Bradesco BBI was the lead coordinator of the issuance, together with Itaú BBA, UBS Banco do Brasil, Banco Santander Brasil, Banco MUFG Brasil S.A and Deutsche Bank S.A Brasil.

Scala, however, had issued a request for proposition (RFP) to the market, detailing its project and stipulating its conditions for the issuance, which reached 30 financial institutions, as well as companies in Brazil and international banks such as JP Morgan Chase, Peigo said.

The demand initially placed by Scala for the issuance stood at around 1.5bn reais. However, after closing a contract for new datacenter usage, this value ended up rising.

“The debt market is not closed to the digital infrastructure sector, as some might think,” said the executive.

Of these 30 institutions, 21 sent proposals, some accepting all the conditions, others accepting only part. Scala then shortlisted 10 companies to reach the six banks that participated in the financing.

“We wanted to prioritize national institutions. We kept Bradesco, which was already our backer, and brought Itaú, Banco do Brasil and Santander. Mitsubishi (MUFG) also entered, we wanted to open that door with the Japanese. We already have a global partnership with them at DigitalBridge,” said the CEO.

This was also the first bond issuance conducted by Scala, with support by DigitalBridge.

The first of them, which led to the creation of Scala more than two years ago, was coordinated by DigitalBridge, then called Digital Colony. The second, in March of this year and worth 1bn reais, was championed by DigitalBridge with support by the Scala team.

Part of the new issuance will be used to prepay the March one. The remaining 1bn reais will be used for expanding the company's datacenters in Latin America.

The company intends, for example, to immediately build four datacenters in Colombia that were planned to be developed over the next few years, said Peigo.

Scala has five datacenters in operation in Brazil and another 11 under construction in its four markets, Brazil, Colombia, Chile and Peru.

The values raised provide a good "cushion" for the company for the next six to nine months, when a new round is expected to be negotiated, the CEO said.

Scala has already released a US$500mn RFP for vendors, one of the largest ever undertaken, targeting long-term purchases of equipment for all of its established datacenter projects.